Guide to Torts Affecting Business

Tort is a legal term in common law jurisdictions that means a civil wrong, and can be a criminal wrong, that is recognized by law as grounds for a lawsuit. Its equivalent in civil law jurisdictions is delict.[1] It is part of the law of obligations but unlike voluntarily assumed obligations on the parties created through a contract, the duties imposed under tort law are mandatory for all citizens in that jurisdiction. To behave 'tortiously' is to harm another's body, property, or legal rights, or to breach a duty owed under statutory law. One who commits a tortious act is called a "tortfeasor".  While there are numerous tort that effect both individual and businesses, this guide is limited to some of the most common torts relating to business activities.

United States Tort Law

Under United States tort law, torts are generally divided into three categories: intentional torts, negligence, and strict liability torts.  Most tort claims or causes of action arise under state law and are heard in state courts. Some state tort claims are heard in federal courts under doctrines like diversity of citizenship of the parties or supplemental jurisdiction; such topics are the core of the standard American civil procedure course and are too complex to summarize here.

Intentional Torts

Intentional torts include those actions that are intentional and voluntary and that are made with knowledge by the tortfeasor (i.e. the person who committed the tort) upon the plaintiff (the one who brings the complaint seeking relief). Intentional torts include: battery, assault (apprehension of harmful or offensive contact), false imprisonment, intentional infliction of emotional distress (IIED), invasion of privacy, fraud, defamation of character (includes libel, which is written defamation of character and slander, which is non-written defamation of character), malicious prosecution, abuse of process, the real property tort of trespass to land, and the personal property torts of conversion and trespass to chattels.

Unitentional Torts

Amongst unintentional torts one finds negligence as being the most common source of litigation in most American courts (partly because it is one of the few torts for which ordinary people can and do obtain liability insurance.) It is a form of extracontractual liability that is based upon a failure to comply with the duty of care of a reasonable person, which failure is the proximate cause of damages. That is, but for the tortfeasor's act or omission, the damages to the plaintiff would not have been incurred. Other non-intentional torts include negligent infliction of emotional distress (or NIED, not recognized in all states), malpractice (professional negligence), and product liability (liability of manufacturers, wholesalers and retailers for unreasonably dangerous products).

Some jurisdictions recognize one or more designations less than actual intentional wrongdoing, but more egregious than mere negligence, such as "wanton", “reckless” or “despicable" conduct. A finding in those states that a defendant's conduct was "wanton," “reckless” or “despicable”, rather than merely negligent, can be significant because certain defenses, such as contributory negligence, are not available when such conduct is the cause of the damages. Also punitive damages (sums intended to punish the defendant) may be awarded in addition to actual damages intended to compensate the plaintiff just as they can be awarded for intentional misconduct. These punitive damages awards can be quite substantial in some cases.

Strict Liability

Strict liability is a legal doctrine that makes a person responsible for the damage and loss caused by his/her acts and omissions regardless of culpability. Strict liability is important in torts (especially product liability), corporations law, and criminal law. For analysis of the pros and cons of strict liability as applied to product liability, the most important strict liability regime, see product liability.

Economic Torts

Economic torts are torts that provide the common law rules on liability for the infliction of pure economic loss, such as interference with economic or business relationships.

Economic torts protect people from interference with their trade or business. The area includes the doctrine of restraint of trade and has largely been submerged in the twentieth century by statutory interventions on collective labour law and modern antitrust or competition law. The absence of any unifying principle drawing together the different heads of economic tort liability has often been remarked upon.

The principal torts can be listed as passing off, injurious falsehood and trade libel, conspiracy, inducement of breach of contract, tortious interference (such as interference with economic relations or unlawful interference with trade), and watching and besetting. These torts represents the common law's historical attempt to balance the need to protect claimants against those who inflict economic harm and the wider need to allow effective, even aggressive, competition (including competition between employees and their workers).